It can be costly to infringe the intellectual property rights of another. On August 24, 2012 Apple won its patent case against Samsung. The nine-member jury awarded $1.05 billion to Apple and rejected Samsung’s countersuit – finding the Samsung patents not-infringed by Apple.

For Seattle businesses, this case presents an important lesson – taking shortcuts in the design and implementation of a product is not prudent. In addition to the $1.05 billion, Apple will ask the court for an injunction against Samsung, which if granted, would require Samsung to immediately suspend sales of the infringed products in the United States as Samsung files its appeals.

What Was Infringed?
The jury found that Samsung infringed six of Apple’s patents. Regarding software, Samsung infringed; (i) Apple’s bounce-back effect when a user tries to scroll beyond the end of a list or image; (ii) Apple’s pinching and zooming scroll feature; and (iii) Apple’s tap-to-zoom feature. Regarding design, Samsung infringed: (i) Apple’s iPhone’s face, screen and speaker slot; (ii) the ornamental design and shape of the iPhone’s face, rounded corners and bezel; and (iii) the icon arrangement on the home screen. The jury found no infringement regarding Samsung’s tablet. Samsung’s infringement included 21 of its smart phones.

Additional Damages
The jury also concluded that Samsung willfully infringed on five of the patents. Willful infringement is the deliberate disregard of intellectual property rights of the valid patent holder.(1) It is a question of fact and involves a determination as to an infringer’s state of mind.(2) In determining the question of willfulness, the jury looks to whether the infringer acted in disregard of the infringed patent with no reasonable basis to believe it had a right to do the acts in question.(3) In short, the jury found that Samsung executives either knew or should have known their products infringed on the listed patents. Because Samsung’s infringement is identified as “willful” there is potential for punitive damages against Samsung. In patent cases, the judge is given the responsibility of determining whether to award punitive damages based upon a set of factors outlined in law. In this case, the statute would limit potential patent damages to three-times the damages calculated by the jury. However, the trade dress damages are not limited.

Apple has also asked for an injunction to stop Samsung’s ongoing infringement. US patent law places the decision on whether to grant injunctive relief in the hands of the district court judge. The briefing on injunctive relief will take several weeks and was announced to begin on September 20. Whether an injunction will be granted depends upon the four “eBay factors” defined by the US Supreme Court in 2006. When granting injunctive relief, the judge has a lot of discretion. Some courts have issued broad injunctions, ie., “stop infringing the patent”, while other courts issue much more narrow orders directed only toward the particular products that infringe. If an injunction is issued, there is still the question of whether relief will be stayed pending appeal. Stayed pending appeal means that the injunction will not take place until after appeals have been concluded. Normally an infringer generally has no right to continue infringing while the case is on appeal. However, courts will stay injunctive relief when the stay prevents great potential harm and/or the appellant has a strong case on appeal.

Intellectual Property: Philosophies Divided
Apple and Samsung stand on two sides of the intellectual property debate. Apple argues for broad protection of all its intellectual property. Samsung views this as a danger to consumers as they claim it will lead to higher prices and fewer choices.

Apple:
We are grateful to the jury for their service and for investing the time to listen to our story and we were thrilled to be able to finally tell it. The mountain of evidence presented during the trail showed that Samsung’s copying went far deeper than even we knew. The lawsuits between Apple and Samsung were about much more than patents or money. They were about values. At Apple, we value originality and innovation and pour our lives into making the best products on earth. We make these products to delight our customers, not for our competitors to flagrantly copy. We applaud the court for finding Samsung’s behavior willful and for sending a loud and clear message that stealing isn’t right.

Samsung:
Today’s verdict should not be viewed as a win for Apple, but as a loss for the American consumer. It will lead to fewer choices, less innovation, and potentially higher prices. It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies. Consumers have the right to choices, and they know what they are buying when they purchase Samsung products. This is not the final word in this case or in battles being waged in courts and tribunals around the world, some of which have already rejected many of Apple’s claims. Samsung will continue to innovate and offer choices for the consumer

Conclusion
Samsung and Apple were once friendly competitors. This case turned them into bitter enemies. The outcome is damaging for Samsung because 21 of its leading smart phone devices have been found infringing.
It is important to note however that the South Korean court in Seoul ruled on Friday contrary to the American court. The Korean court held that Samsung has not violated the iPhone design. The foreign court stated that though Samsung’s flagship Galaxy smartphone looks very similar to Apple’s iPhone, Samsung has not violated the iPhone design. The South Korean judge said it would be difficult to conclude that consumers would confuse the iPhone with the Galaxy given the fact they clearly have the respective company logos on the back of each model, and consumers also factor in operating systems, brand, applications, price and services when buying a phone. “There are lots of external design similarities between the iPhone and Galaxy S, such as rounded corners and large screens … but these similarities had been documented in previous products,” stated the judge at the Seoul Central District Court.

The foreign court’s decision highlights the difficulty in determining the outcome in patent infringement cases. Apple won the first battle in the United Sates, but it remains to be seen if they’ll win the larger war.
If a Seattle company is thinking of releasing a similar product to their competitor, it is important they seek counsel from an experienced intellectual property attorney. This advice is important for non-tech companies as well, including companies selling products (shoes) camera bags or other widgets. The attorneys’ fees will be far smaller than multi-million dollar judgments, or in this case, a billion dollar judgment.

ABOUT COPYRIGHT COW™
Copyright Cow™ is the Blog and alter-ego-Blogger name for Timothy B. McCormack, attorney at law, a well established and successful Seattle-based intellectual property, technology and business lawyer.

Copyright Cow™ -- Defending the American Dream!

The Seattle Post intelligencer “Copyright Cow” Column focuses on the untold stories of the second largest export of the United States – intellectual property and technology – through the lenses of law, economics and society. Intellectual property is comic books, cartoon characters, the “Book of Life” embodied in the Human Genome, medicine, technology, movies, websites, and, for example, the business of producing and distributing milk (a Copyright Cow favorite).

Timothy B. McCormack, attorney at law, and Seattle based technology and copyright lawyer writes the blog to help educate and raise awareness of some of the most important economic and legal issues of our time – intellectual property. Timothy B. McCormack founded McCormack Intellectual Property Law PS